Car allowance help

magiccat1227

Hi,

i have just started a new job where i have been given a car allowance. I can use a company where i can lease a car through salary scarafice.

my question is is the whole allowance tax able or just what is left after salary scarice?

for example pay = x car allowance =5000 is x+5000 taxable
or

pay =x salary scarice = 5000-4000 for car therfore is x + 1000 tax able?

marlot

It depends how they've set the scheme up.

You either pay tax on the whole 5000 (effectively it is a personal lease).

Or

you pay tax on the company car AND tax on the remaining 1000. Details of the company car tax here http://www.hmrc.gov.uk/cars/index.htm (its based on the car's emissions)

magiccat1227

it will not be a company car but an allowance to get a car paid monthly, from this i can get a lease car salary scarfice

zagfles

I'm pretty sure it'll be viewed as a company car by HMRC, because you're sacrificing salary and in return the company is providing you with the car benefit.

So you'll pay tax on the £1000 plus tax on the car as a company car (which has scales for C02 emissions etc, see the HMRC site).

Try the "cutting tax" board for more info/confirmation.

marlot

magiccat1227 wrote: »

it will not be a company car but an allowance to get a car paid monthly, from this i can get a lease car salary scarfice

As I said, it depends how they've set the scheme up.

If they've set it up so you pay for the car out of taxed salary, you pay tax on the whole 5000 (effectively it is a personal lease).

Or

The salary sacrifice is taken before tax and it is in essence a company car. You pay tax on the company car AND tax on the remaining 1000. Details of the company car tax here http://www.hmrc.gov.uk/cars/index.htm (its based on the car's emissions).

The second is the most likely.